DEFINITION of Broker Price Opinion (BPO)
A broker price opinion is the estimated value of a property as determined by a real estate broker or other qualified individual or firm. A broker price opinion is based on the characteristics of the property being considered.
BREAKING DOWN Broker Price Opinion (BPO)
Broker price opinions are not used or allowed in every state. Laws may prevent brokers from providing this service or block them from charging fees to perform this duty. Brokers may seek training to conduct and issue price opinions but that does not necessarily make it legal for them to provide this service. State laws may limit the use of broker price opinions to specific circumstances.
Some of the factors that a broker will consider when developing a price opinion include the value of similar surrounding properties and sales trends in the neighborhood. The location of the property and its place among its surroundings factor into the opinion. Comparable listings and recent sales affect the price opinion for a property. Brokers will also take into account an estimate of any of the costs associated with getting the property ready for sale and/or the cost of any needed repairs. It is important to note that a broker price opinion is not the same as an appraisal.
Why Broker Price Opinions Are Sought in Real Estate
A broker price opinion can be requested by a lender who wants an assessment of a property for such needs as the refinancing of a mortgage or a foreclosure. The owner of a property could also seek such an opinion if they are looking to make changes either through a sale or a refinancing of their mortgage. A broker price opinion might be sought because the service could cost much less and be performed more quickly than an appraisal of the property.
Brokers may perform what is known as a drive-by broker price opinion, wherein they only see the property from the exterior. The broker might leave their car, but they will not attempt to enter the residence. An internal broker price opinion is developed by gaining authorized access to the home and reviewing its condition and amenities. This can include taking photos of the property.
In addition to the possibility of being paid to provide this service, brokers may submit a price opinion in the hopes of winning the listing they are assessing. The broker might include a marketing plan for the property when they issue a price opinion to show how they would approach representing the property. Broker price opinions have been regarded as concise alternatives to a comparative market analysis.